Egypt and Sudan are outraged by a new hydro-electric dam construction project on the Blue Nile in Ethiopia that threatens to endanger agricultural productivity across huge swathes of Arab land. The 6,000MW dam, 40km from the Sudanese border, designed to alleviate regional energy shortages and to produce power for export, is scheduled for completion in 2015.

But it may also damage the fragile environment of Sudan and Egypt down river. The Blue and the White Niles, both originating in Africa, are the principal tributaries of the river on which both Egypt and Sudan depend for survival. There have been reports, played down by officials but treated very seriously by the Ethiopian press, of contingency plans prepared by Egypt to deploy air strikes delivered across Sudan airspace to wreck the $4.8bn hydro-power project.

This is one instance of many frictions spreading between thirsty neighbours across the Middle East, fed by disastrous, mounting water shortages challenging economic development and threatening to engulf the region in conflict. The issues involve desertification, investment, agricultural productivity and intergovernment relations.

The construction of Ethiopia’s Grand Renaissance Dam (GRD) is now under way by the Italian concern Salini Costruttori, working in collaboration with Metal & Engineering Corporation, a local electromechanical enterprise.

Alemayehu Tegenu, the Ethiopian minister of water and energy, recently received his Egyptian and Sudanese counterparts in Addis Ababa to sign a diplomatic accord in search of technical cooperation in the management of shared natural resources.

Egypt’s contingency plans for the alleged physical destruction of the dam under construction at a later, advanced stage were disclosed by Wikileaks. The immediate relevance of the embarrassing revelations has been unconvincingly dismissed by Magdy Amr, the Egyptian assistant foreign minister responsible for Nile basin affairs, on the grounds that the plans had been formulated in 2010, preceding the public announcement of the construction.

Abdelrahman Sirelkhatim, the Sudanese ambassador to Ethiopia, has also emphatically denied propositions that his country was engaged in any military conspiracy with Egypt for the destruction of the GRD project.

Both countries are nevertheless deeply concerned with the prospect of a substantial reduction of their principal fresh water supply. Both depend on the Nile for water as well as its reliable annual yield of nutrient-rich sediments producing food crops essential for the survival of their rapidly growing populations.

The GRD hydro-power scheme, the biggest in Africa, will change the vital water balance of both countries. Its giant turbines capable of generating electricity at twice the volume produced by Egypt’s Aswan High Dam, will be fed a by a massive reservoir containing 63bn cubic metres of water. The lake will take several years to fill. And it may well substantially reduce the flow of the river permanently afterwards.

Haydar Yousif, a noted Sudanese hydrologist and an authority on water management issues of the Nile, estimates the GDR’s reservoir “will hold back nearly one and a half times the average annual flow of the river. Filling the reservoir, which could take up to five years, would drastically affect agriculture, electricity and water supply downstream. Evaporative losses from the dam’s reservoir could be as much as 3bn cubic metres a year.”

The dam will also retain silt. The Ethiopian government argues that this will be a net positive effect of the construction as it would increase the lifetime of other dams downstream. Indeed, Sudan has just increased the height of its heavily sedimented Roseires Dam on the Blue Nile near the Ethiopian border in a $441.5m investment programme financed by Gulf donors to boost irrigation as well as hydro-power production.Discussion papers published at a recent Sudan symposium added that the GRD project would assist in the regulation of water supplies downstream for irrigated agriculture and provide assured electricity supplies for the entire region. Nevertheless, tension between Ethiopia and its Arab neighbours have periodically flared since the 1970s when the GRD scheme was first publicly discussed. Egypt and Sudan have both vigorously lobbied against the project.

To calm their concerns, Ethiopia has recently agreed to the establishment of an intergovernmental expert committee including several independent specialists to review the likely environmental effects of the dam downstream. The experts are to report shortly. But an Ethiopian foreign affairs spokesman has already declared his country’s resolve to stick to its existing plans in the face of “any external pressures.”

Ethiopia is the home of a dozen great river basins with a combined hydro-power potential estimated in excess of 45,000MW, but its industrial development is encumbered by persistent electricity blackouts.

Its current five-year national Growth and Transformation Plan for the period ending in 2015 envisages the quadrupling of hydro-power generating capacity from 2,179MW now, eventually to supply much of the Middle East, Africa and markets as far as Europe. The construction of high-capacity power transmission links to Sudan and Djibouti has begun.

The only treaty on sharing the waters of the river once honoured by all the affected countries was based on a colonial era deal set out by Britain in 1929. But it was replaced in 2010 by a new instrument adopted by the five upstream African countries led by Ethiopia – and rejected by Egypt and Sudan.

The Middle East is plagued by potentially perilous conflicts over the sharing and management of precious natural resources including the waters of the Nile, the Jordan and the Euphrates as well as Iraq’s disastrously shrinking marshlands. Nouri Al Maliki, the Iraqi prime minister, warned a recent Baghdad conference that, to avert disaster, the Arab World must unite in the search for goodwill and trust between hostile neighbours in a collective endeavour to meet the looming shortages.

Humanity’s collective demand for water is expected to outstrip supplies by some 40% within a decade and as half, according to American intelligence estimates, threatening massive conflicts. A United Nations study endorsed by 40 retired world leaders reckons that, by the year 2025, essential agricultural productivity alone will demand an additional global supply of 1,000 cubic km of fresh water a year, 20 times the equivalent of the annual flow of the Nile.